April 3, 2012 Audit/Finance Committee Meeting Minutes

The Audit/Finance Committee of the Board of
Trustees of Illinois Valley Community College District No. 513 met at 6 p.m. on
Tuesday, April 3, 2012 in the Board Room (C307) at Illinois Valley Community
College.

Others Physically Present:Jerry
Corcoran, PresidentCheryl
Roelfsema, Vice President for Business Services and FinanceRick
Pearce, Vice President for Learning and Student DevelopmentPatrick
Berry, Controller

The meeting was called to order at 6 p.m. by Dr. Huffman.

REQUEST FOR PROPOSAL
– AUDIT SERVICES

A summary of the proposals
received for audit services was provided to the committee members prior to the
meeting. McGladrey & Pullen, LLP
submitted the lowest cost proposal. The
firm is the sixth largest accounting and consulting firm in the United States
and conducts the second highest number of Federal Single Audits. In 2011, McGladrey & Pullen, LLP also
performed audits for five (5) other Illinois community colleges: Illinois Central, Kaskaskia, Sauk Valley,
Joliet, and Heartland. The reference
check on McGladrey & Pullen was positive.
There was consensus to support the recommendation of McGladrey &
Pullen, LLP by the Audit/Finance Committee members.

A summary of the proposals
received for banking services was provided to the committee members prior to
the meeting. Centrue Bank of Princeton
offered the best interest rate and the lowest fees. They have locations in Peru and Ottawa. There was consensus to support the recommendation
of Centrue Bank by the Audit/Finance Committee members.

BUDGET UPDATE

Cheryl Roelfsema had
disappointing news for the current fiscal year on the revenue side. Property taxes will be $100,000 under
budget. LaSalle County had 25 property
tax appeals resulting in a decrease in equalized assessed valuation of $27
million. This includes the reduction in
the Exelon plant of $21 million. This
results in a $67,500 decrease in the operating funds. Property tax revenues are spread over two
fiscal years - $37,500 less in operating funds for FY12, with the full
reduction in FY13. Corporate Personal
Property Replacement Tax (CPPRT) will be under budget by $400,000. The budget amount was based on FY11
receipts. It was discovered the FY11
receipts were inflated due to one-time events.
The College is now aware of a report published by the State that will
help with projecting the CPPRT revenues going forward. Tuition and fees will be $600,000 below
budget. Credit hours are 6.5 percent
less than FY11 and 4.5 percent below budget.
Truck driver training and mini-course tuition will be $200,000 below
budget. Public service revenues will be
$200,000 below budget due to decreases in truck driver training with Sauk
Valley and Waubonsee, continuing education, and the IBEW contract for
instruction. This information was
communicated across the campus. Open
meetings were well attended and resulted in great dialogue among the staff and
administration. In trying to avoid a
deficit for the year, the following actions have been taken: 1) implemented a hiring freeze; 2) focus on
increasing course utilization.
Increasing the average student count per section from 17.7 to 18.7 would
save approximately $200,000; 3) necessity-only expenditures; and 4) effectively
stopped non-extension site travel; effectively stopped capital spending. On the expenditure side, legal fees will be
at least $130,000 over budget. The
additional legal fees are being spent to protect future revenues of the
College. It will be difficult to
eliminate the deficit, but the College continues to monitor purchases and is
doing everything to cut costs. Credit
hours are projected by past history and institutional research. Other factors that may affect enrollments
include availability of financial aid and the economy. The number of students has not decreased as
much as the number of credit hours. This
may be due to students receiving the Pell Grant receive the maximum amount at
12 credit hours. A number of students could
take 15 or 18 hours, but at 12 hours they could get the full grant and use the
remaining amount for gas and rent. It
was suggested to consider giving a reduced tuition rate if the student takes
additional hours beyond 12. Dr. Corcoran
will explore if this is a best practice at any other community colleges. Currently, there is a $1.4 million shortfall
for FY12. Pat Berry presented an update
on the FY2013 budget. Revenues for FY13
are projected to be $1.1 million less than the FY12 budget but $300,000 more
than the FY12 actual projections. The
College is budgeting a five percent decrease in credit hours which equates to
$400,000 less in revenue. The $8.25 tuition increase will add $700,000 in
revenue. Given the revenue decline, the
College must look at all positions and programs against the core mission. Contract services, materials, and travel will
be cut. Other areas to be discussed for
reduction include: 1) Personnel costs
account for 77 percent of the operating fund expenditures. Some of the reductions must come from full-
and part-time staff; 2) Institutional waivers totaled $235,000 in FY12. These include athletics, art, journalism,
music, theater, Student Government, Honors program, etc; 3) E2College
waivers totaled $215,000 in FY12. This
represents a 50 percent reduction in tuition in high school students; and 4)
bad debt write-offs accounted for $77,000 in FY11. More aggressive collection efforts will be
considered. Dr. Corcoran reported there
has been a change in the money-purchase pension formula and the College is
seeing a wave of retirements across the community college system. Three outstanding IVCC faculty at the higher
end of the salary schedule have submitted their retirement notices and plan to
come back to teach part-time which would help the financial situation. Mission-critical services must be looked at
and this means some positions could be reduced.
Dr. Corcoran commended the work of the budget council and administration
working together to prepare a balanced budget.
If the College needs to reduce some of its services, the administration
needs to prepare for it. It was noted by
Dr. Driscoll that the administration must keep in mind during these discussions
that the students and quality instruction need to come first. It was suggested the administration needs to
look at the number of tuition waivers. Another update for the audit/finance
committee could be presented in early June before the tentative budget is
presented in July and the final adoption in August.

TUITION WAIVERS

Dr. Pearce distributed
information on the number and the cost of institutional waivers over the past
five academic years. For all the
waivers, one full-time waiver is 32 credit hours except for the honors full
waiver, which is six credit hours. Tracy
Morris and Dr. Pearce met with Tommy Canale to discuss options of modifying the
way the waivers are distributed and the number of credit hours allowed. The National
Junior College Athletic Association mandates the maximum number of students
receiving tuition waivers per sport. The
athletic department can grant a full waiver or half waiver – 16 hours per
semester or 8 hours per semester. Dr.
Pearce proposed establishing the number of credit hours, instead of the number
of waivers, per sport that the coaches could use in recruiting. This would still be within the NJCAA limit
but would provide more freedom in recruiting.
He proposed to decrease the number of waivers from 74 to 50 which would
result in a $50,000 savings. The
athletic department would still have ample resources to recruit. He also proposed to maintain the academic
waivers as is and the honors program with 14 waivers at six credit hours
each. They also discussed the
elimination of a couple sports. The
whole athletic program is subsidized.
The tennis program has no facilities and is not competitive. He would recommend eliminating both men’s and
women’s tennis. The College would still
honor waivers already given to tennis students.
Dr. Driscoll would like financial information (the cost per student, per
sport) to help with his decision.
Patrick Berry and Tracy Morris looked at each sport as to what each
cost, but some are very active in fundraising.
Tommy Canale and Tracy Morris have been involved in the decision to
eliminate the tennis programs. Dr.
Huffman noted that when it comes time to cut the budget, the administration may
have to look further at the athletic program.
The Board must place education first.
Dr. Pearce noted there is an Arrowhead Conference meeting on April 26
and if the Board plans to eliminate a sport, IVCC should give them notice at
that meeting. As far as the coaches,
they need to know before the waivers are given.
Eliminating tennis represents a substantial savings in a way that will
not create havoc in the athletic department.
The Board could take action at the April board meeting. The audit finance committee had consensus in
principal and the administration will proceed.
Although Dr. Huffman is not big on student referenda, if further drastic
steps were needed in athletics, he could see asking the students if they would
pay a higher fee for playing athletics or asking all students if they are
willing to pay more to sustain the program.